The tap room model tends to be very local - people come drink your beer because it’s a nice place to drink beer, it’s in the neighborhood, and the beer is decent. In Oregon (at least) decent beer doesn’t get you into bottle shops and grocery stores. Margins are totally different too. A tap room can survive selling 500-700 barrels. Selling to wholesale account requires double that production, and if you work with a distributor you need to be producing 3,000 to 4,000 barrels to make it work. Obviously the capital needs are significantly different.
I’ve thought about posting something about the similarities between wine and beer sales channels that speaks to this issue. I’ll try to get to that in the next day or two.
Thanks, Rick. There’s a couple local-to-us breweries that we do (did) occasionally visit for the reason you stated (it’s a nice place to drink beer), even though I’ve found the beers to be average-at-best; if the decision were always up to me, we wouldn’t go there, as it’s “all about the beer” for me. I can see how those places wouldn’t survive — they likely weren’t surviving on the strength of their beer, but rather the overall package, which cannot be offered in the current environment. And, I guess if people can’t enjoy the whole package, many won’t show-up.
I’d be pretty surprised to see any craft breweries who are making legitimately excellent beer not make it through COVID to the other side. Of course, to be fair, I should probably limit that opinion to my locale, as logistics/situations may be different elsewhere.
As each brewery has unique circumstances (leases, debt levels, distributor contracts (or lack thereof), ability to implement rapid growth plans), I don’t think making awesome beer insulates a brewery from going under ever, but especially in this environment. After The Commons (a much beloved Portland brewery - at least by beer geeks - and arguably a top 5 brewery in the city) went under a few years ago when breweries were opening left and right, I believe any brewery is vulnerable if they make business or operational missteps, especially in the economic environment of the next few years.
What misstep(s) did The Commons make? I see excellent restaurants close all the time in L.A., but I cannot recall one excellent brewery closing. Of note: I view selling as materially different than closing.
I know both Sean and Mike (owner) a little. I think the biggest issue they had was related to expanding too fast and (more importantly) going with a distributor that had no idea how to sell Belgian-style beers in grocery stores.
I loved their beers, and always thought of them as the Belgian to our German.
Thanks. I do miss their beers tremendously, but Sean making some really excellent beers at Von Ebert (albeit majority non-Belgian) takes a little bit of the sting out of their closing.